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Hi Team,

Do you have an Abundance Mindset or a Scarcity Mindset?

It's hard to believe that financial Intelligence is not taught at school, it is rarely discussed at home.

With everything going on in our world at present, you would be crazy not to have a well-thought-out financial plan for the next 3 to 5 years.

What really baffles me is how so many smart well-educated people make such bad financial decisions and have very little financial intelligence.

The rules of good financial management are really very simple, but the majority of people just don't follow these rules.

• Don't spend more than you earn.
• Save part of your weekly earnings.
• Invest in stable, diverse investments for the long term.
• Buy assets that grow in value.
• Pay off your credit card balance every month (this is a must...).

"How much money you earn is irrelevant, it's time and savings that matter."
"Don't save what is left after spending but spend what is left after saving." Both quotes by Warren Buffett

Whether you have an abundance mindset (you believe there will always be enough and there will always be more) or a scarcity mindset (you believe there will never be enough and the system is rigged against you) is largely determined by your parents and grandparents experiences with money.

My attitude to money has always been very positive and has never held me back from taking modiste risks over the last 40 years. I have been very lucky when it comes to parental influence. I grew up with an entrepreneurial mother and a very practical hardworking father. They were able to achieve a huge amount with relatively modest amounts of earnings and always lived within their means.

"Very few wealthy people show off their wealth" Unknown

When I look back on my upbringing it is very obvious where my robust financial beliefs come from.

• My parents were always frugal yet generous and hospitable.
• They never drove new or expensive cars.
• They sacrificed a lot to put my brother and I through private school.
• They were always asset rich but cash poor.
• They made several strategic real estate investments throughout their lives. 

"True abundance isn't based on net-worth, it is based on self-worth." Gabrielle Bernstein

My grandparents experience with money was quite different. They lived through the great depression and both world wars.  Therefore, they never trusted banks or the government and had an extremely cautious approach to risk and borrowing money. This is where my parent's frugality came from. We have all gone through similar experiences in the last few decades (the 2008 global financial crisis and the current pandemic induced economic instability). Many of us are therefore experiencing a form of financial trauma and our attitude to money is being adversely affected by these traumatic events. 

Our beliefs about money are deep-seated and influence our decisions and behaviour for a throughout our lives. We have no control over adverse economic conditions and the current unstable and recessionary conditions are creating a lot of uncertainty and financial stress throughout the community. At present money problems are the number one source of stress and anxiety and this will have flow on effects on out attitude to money for years to come.

So getting in touch with your attitude to money and understanding where this attitude comes from is a vital part of your financial intelligence. These attitudes are the foundation of your financial decision-making and determine the composition of your personal finances. Next week I will look into how we can all learn more about our financial Mindset and follow your "trail of crumbs" to understand its origins.

Thanks for reading,
Stay safe and "Don't be afraid of growing slowly. Be afraid of standing still".
David